Insurers in Gulf States feel pinch from construction equipment thefts.

The widespread rebuilding effort along the U.S. Gulf Coast in Louisiana, Florida, Texas, Mississippi and Alabama is feeding a variety of criminal activity, including an already burgeoning business in construction theft.

Experts fear the annual tally of stolen construction equipment--a spiraling national trend that has troubled the construction and insurance industries for years--could hit a new high this year as more contractors move into the Gulf region to participate in ongoing reconstruction work.

Already, one organization that tracks the nearly $1 billion equipment theft industry is reporting a noticeable increase in the amount of equipment reported stolen in certain Gulf and neighboring states since hurricanes Katrina, Wilma and Rita struck the region last year.

Construction equipment is being stolen not only from the hurricane-damaged areas, but from elsewhere and being transported to those areas. "Pieces of equipment are showing up over there that were simply taken from other places," said Charles Comiskey, chairman of the construction practice group of RiskProNet International, a network of independent insurance brokers in the United States and Canada, and a senior vice president at Brady Chapman Holland & Associates, among the largest insurance brokers in the Southwest.

The cost of insuring construction equipment has increased because of actual loss or damage resulting from the hurricanes, as well as the increase in thefts, Comiskey said. "It certainly is a trend that is going to be reflected in rates, especially for those who have incurred adverse loss experience," he said.

In its 2005 Equipment Theft Report, the National Equipment Register said the number of stolen pieces of equipment has increased 22% in the Gulf region and surrounding states since 2004. This figure is expected to rise, according to the organization, which conducts its annual study to provide equipment owners, member insurance companies and law enforcement with information to help target theft-prevention and investigation resources.

The National Equipment Register said it also noticed that equipment thefts spiked in neighboring Gulf states immediately after a hurricane struck, and then, as more equipment moved into the storm-damaged areas, thefts increased in those areas too. More than 60% of the equipment reported stolen in these areas were skid steer loaders, backhoes and small to medium-sized tractors, according to the report.

Feeling the pinch are insurers, which most often have to pay claims even if the insured's negligence facilitated the theft, unless there's a requirement in the policy that the insureds take some kind of precautions with their equipment, Comiskey said.

Some of the major carriers that sell equipment floaters include Zurich Financial Services Group, Hartford Financial Services Group Inc., St. Paul Travelers Cos. and Amerisure. Most cover a variety of exposures.

Hot Off the Lot

In 2004, 74% of all construction-equipment theft covered by insurance occurred while contractors were out on a job, while 24% happened on the insured's own property.